A favorite vacation destination for many Americans is Florida, which has favorable weather and nice beaches. If you're nearing retirement age, you may even be thinking about the Sunshine State as a place to live. But money expert Clark Howard has a warning for those who are looking into the condo market.
What’s Going On With Florida’s Condo Market?
Clark says the tragic collapse of Miami's Surfside condominium building in June 2021 has had continuing fallout in the form of stricter rules and higher costs for the market there.
“The Florida State Legislature passed new laws that enforced strict standards on condos built in 1994 or prior, which is a huge percent of the condos built in Florida,” Clark says.
Among other rules, the laws signed by Florida Gov. Ron DeSantis in 2022 and dubbed "Condo 3.0," require:
- Inspections for all condominiums and cooperative buildings that are three stories or higher.
- Structural integrity reserve studies for buildings three stories or higher.
- Condo owner associations to make structural inspection reports and reserve studies part of their official records and available to potential unit buyers.
“So all at once, buildings are having to come up with Soviet-style five-year plans and they’re having to do meaningful repairs that have been what they call ‘deferred’ maintenance year after year after year,” Clark says.
Why Florida Condo Prices Are Plunging
As a result, condo listings are starting to suffer big-time, Clark says.
“You’ve got a lot of people in these buildings, maybe they are retired, maybe it’s a part-time place. They didn’t sign up to have a special assessment that could be more than what they had originally paid for their units,” Clark says. “So the inventory of units for sale has gone through the roof in Florida and it is different from the single-family housing market.”
According to Realtor.com, "Condo prices are down around 12% since the peak of demand in 2022, while single-family homes are roughly even compared with the same time. In fact, there's been a year-over-year decline in condo prices, but single-family home prices are now on the upswing — even if they're not seeing the kinds of COVID-19 pandemic-driven increases like they did in 2020 and 2021."
Clark’s Advice: Hold Off on Buying a Florida Condo Right Now
“Because this is something that the buildings are compelled to do, people are bailing,” Clark says, referring to Florida condo owners.
“And a lot of out-of-state buyers don’t even know about this. And they come and they’re like ‘Wow! This condo is so much cheaper than I thought it would be!’ Not realizing that the purchase price is not the only price you’re going to have to pay. You may have to pay a very large fee.”
So because of the expenses associated with the new rules, Clark wants you to hold off on buying a Florida condo for now.
“Buying a condo in 2024, 2025 and maybe the first half of 2026 has real hazards with the unknowns due to the additional costs you’ll face buying them,” Clark says. “So if you see something, you may say, ‘Wow, that price is right.’ Is it really right?”
Final Thoughts
Clark says the Florida condo market will improve eventually, but prospective condo buyers will need to be patient. “We have a problem going on that will normalize over time but is emphatic right now.”
Clark says a buyer not doing due diligence or not having an agent who is really knowledgeable about what’s going on with the underlying issues involving condos could cause a client to lose quite a bit of money. Buyer beware!
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